Note on… Corporate Liability, ATS and politics

November 3, 2010

By Antoine Martin.

Recent news raises complementary thoughts as to the policy consequences of the Kiobel, Boimah Flomo and Sosa decisions on corporate liability under ATCA/ATS. In fact, many criticisms can be read as to the inability of US Courts to admit jurisdiction over claims involving allegations of corporate human rights abuses, but the political nature of such cases is often left unconsidered.

For instance, why should US Courts, more than others, be expected to decide on international issues in the absence of an international Court competent on such matters? Second, which law should apply? Although Boimah Flomo admitted that corporations could act in violation of customary international law, (see here) the content of customary international law with regards to corporations remains undefined. Finally, could claims be considered without international politics being involved? Commenting on Kiobel, Professor Kenneth Anderson indeed recently asked how a finding of liability by US Courts would anyway be accepted by the international community:

“ What happens, that is, when plaintiffs in Africa decide to start using the ATS to sue Chinese multinationals engaged in very, very bad labor or environmental practices in some poor and far away place? Does anyone believe that China would not react — in ways that others in the world might like to, but can’t? Does anyone believe that the current State Department would not have concerns — or more precisely, the Treasury Department?” (Via Conflicts of Laws)

Recent news

As a matter of fact, Reuters reported on the 18th October 2010 that Police in Zambia charged two Chinese mine managers with attempted murder in connection with the shooting of 11 miners protesting against poor pay and conditions. Elsewhere, it was suggested that Union leaders had long complained about dangerous operating surroundings, appalling sanitary conditions, lacks of proper clothing for its workers, and criticized the “slave wages” paid to locals.

The example speaks for itself and perfectly illustrates Anderson’s suggestions.

China, in fact, remains a major investor in Africa and plays a key role in the development of African infrastructures. Therefore, even though some mention routine abuses and an increasing anti-Chinese sentiment in Zambia since 2006 (six workers were shot by their Chinese bosses during riots over delayed wages in 2005), the political consequences of a potential finding of corporate liability might have significant deterrent effects in many regards (government reticence to have a claim raised, pressure on victims, etc).

In short, the interest of African states in keeping such issues under control is clear, while the interest of US Courts to avoid being involved in a political crossfire is similarly understandable.

Law v Policy

Apart from questioning the authority of US Courts to interpret customary international and apply their reasoning to foreign parties, the legitimacy of US Courts to judge foreign companies for their behaviour abroad could be questioned insofar as findings of either jurisdiction or liability might have policy implications.

The wording of § 1350 of the US Code (ACTA) –which reads “the district courts shall have original jurisdiction of any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States”– is indeed extremely vague in nature. US Courts, as a result, might be unable to decide whether jurisdiction is to be restricted to cases involving US corporations, or whether claims against multinational groups in general could be admitted. Kiobel, for instance, involved companies incorporated in the Netherlands (Royal Dutch ) and the United Kingdom (Shell) which had no legal ties with the US justice (p13).

The Sosa decision, as a matter of fact, suggested that authorizing ATS suits would have an “obvious potential to affect foreign relations”, a point confirmed in Boimah Flomo where the Court similarly held that permitting corporate liability under customary international law would essentially constitute “a policy judgment better made by a legislature than a federal court that facilitating victim compensation is more desirable than deterring individual misconduct” (p.10).

US tribunals as world courts for corporate abuses?

While findings of liability in cases involving foreign parties would undoubtedly give rise to worldwide diplomatic tensions, the US Courts, in turn, would most likely end-up being criticised for interpreting customary international according to various diplomatic interests and being accused of domination.

In fact, some have concluded that the US Courts after the Unocal case (to cite but one) rejected the idea of becoming a tribunal for claims against corporate abuses by US groups (Muchlinski for instance). Sosa, Kiobel and Boimah Flomo, in fact, even suggest that the US courts are not willing get involved into international policy matters, nor to become a global forum for litigations brought against multinational firms in general.

Policy considerations might therefore constitute a major justification of the many apprehensions of US Courts in solving the issue of corporate liability for human rights abuses (in the current worldwide political climate, could anyone imagine Iran admitting the jurisdiction of a US Court to decide upon the behaviours of its corporations?), but overall, should they be expected to decide on such matters?

One Response to “Note on… Corporate Liability, ATS and politics”

Hasn’t the “policy debate” (which you are afraid might be entered by courts simply by accepting jurisdiction) already been decided by the first Congress? The ATCA provides for jurisdiction in cases of most shocking, egregious violations of international law, exactly BECAUSE Congress feared that courts would refrain from exercising jurisdiction in these cases due to non-legal concerns.

On policy: Where the positivistic law is vague, courts at times need to apply rules of interpretation of law, draw analogies, use common sense, reasoning and morality because it is necessary to render a just decision. Sosa, and Khulumani/Ntsebeza, for instance, have seen much of that. It’s close to policy, but it might not be just that. When applying the ATCA, the courts do not have a discretion to choose – or not choose – between options, all of which are equally “legal”.

Moreover, “diplomatic tension” in ATCA cases could have several positive consequences. Maybe they, together with other values involved, can indicate when Tension Concern is neglectable. Sosa, after all, doesn’t seem to deem Tension Concern very important.